This is the final segment of our interview with Microsoft Chairman Bill Gates, where we discuss why Creative Commons advocates aren't (or are?) communists, and why Microsoft feels their DRM offers the best of both worlds.

Gizmodo: When you talked to CNet (I believe that was yesterday), you sort of ticked off some of the blog world with some of the comments... a specific comment that was made, about some of the IP advocates—people that are advocating more... not necessarily open source, but Creative Commons and things like that. A less restrictive IP environment. You made an analogy and called them "communist."

Do you feel that's necessarily a fair judgment to make, to call those people 'communists,' as opposed to someone who adopts DRM as maybe... a 'capitalist?' (I don't know what you're thinking the opposite would be).

Gates: No, no, no. I didn't say those people were 'communists.' I did say that they're... The question is: what incentive systems should exist in the world? Call 'communism' a system where [in] the extreme case you believe that the idea of the individual getting lots of wealth in return for the things they do... that that's wrong. If you have no incentive for individual excellence and it's just sort of, you know, banned. All the way up to an extreme that nobody would believe in, that there's no redistribution of wealth and that's there's no expiration of rights and control. So you have this huge spectrum.

All I was saying is that the number of people who are at this extreme who believe there should be no incentive systems for creative work—there's actually less of those people. The question seemed to be saying that the whole support for IP and incentive systems was completely falling apart and didn't I notice that was a big trend, and I said, no, on the contrary. The idea of capitalistic incentive: there's actually a higher percentage of the planet—take all of China—that's involved in capitalistic incentive systems than there have been in the past. That's all.

Now, reasonable people can disagree about it. There are very few people at either extreme at this point and there's lots of good debate. Take one point on the spectrum: that there should be no patent system. Another point in the debate would be that it should be somewhat improved patent system. I was just saying that the balance was, 'Hey, let's draw out the creativity of all the smart people in China,' which the communistic system did not. Let's draw out the creativity of the people in India. Let's have these great university systems and the internet letting you find buyers and sellers in much better ways than ever before. And the world is richer for what's gone on.

Gizmodo: Do you think that it's critical to protect IP—software, music, whatever... Do you think it's critical to protect those things with DRM or do you think that, or do you feel like you have to provide the DRM so that the companies that are distributing that stuff will allow it on your systems?

Gates: Well, ignore DRM for a second. Should an artist that creates a great song be paid for that song? That's where you have to start. You don't start with DRM. DRM is just like a speed bump that reminds you whether you're staying within the scope of rights that you have or you don't. So you don't start with DRM. That's like saying, 'Do you believe in speed bumps?' You have to say, 'Should people drive at 80mph in parking lots?' If you think they should, then of course you don't like speed bumps.

Gizmodo: I think that's sort of disingenuous. Obviously people think that artists, or you know, whoever creates software should be paid...

Gizmodo: You don't think that... Well, okay, I guess that's true. There is definitely a side of...

Gates: Go back to China in 1950 and say, "Hey, I wrote a song! Pay me! Please, pay me!" And then you can read, it says right there: you will not be paid. So yes, views about incentive programs run the entire spectrum.

Gizmodo: Okay, so say that's true. Do you think that DRM as a roadblock, or Microsoft's role in setting up that roadblock, do you think that's helping artists get paid? Do you think you're helping people protect their money?

Gates: That's what they think.

Gizmodo: That's what the artists think, you're saying?

Gates: Yes. There are artists who want the software to remind people of rights boundaries. Are those authors wrong or right? That's up to them. We don't take a position on that. What we want is to have as much content as possible available. And available in the most convenient, easy-to-use form.

Gizmodo: So if that's the case, why in the Windows video players—the [Portable] Media Centers that just came out—why do you have to transcode, let's say a DivX that you might have downloaded or ripped a DVD that you purchase. Why do you have to transcode that to Windows [Media] Video before you copy it?

Gates: That has nothing to do with rights management. Not a thing. We don't have the codec! We just don't happen to have that codec in the Portable Media Centers. This has nothing to do with rights management. There's a discussion whether we should put the DivX codec in. Believe it or not—and you'll find this ironic—we are both a defendant on intellectual property as well as saying there's some value on intellectual property, so whenever we put things in our systems, we have to look at what the IP rights are.

That transcoding has nothing to do with rights management. When we see a format that we don't natively support, the only thing we can do is transcode it. So if you say, hey, why don't we natively support it, that's a question of how many codecs should we put in there? I think the DSPs are actually rich enough to do some additional formats and maybe in future versions we should put those formats in. There's nothing philosophical about that; nothing to do with rights management.

We've always supported, in everything we've done, if something doesn't have a rights envelope on it, we don't sit there and sniff it and say, 'Oh, it looks like you've got Mickey Mouse here, and we don't see in our files that you paid for Mickey Mouse.' We never do anything like that. We support... If there's no envelope, we do everything fantastic with it.

But if there's an envelope that says 'this should only be done with this,' you're right: in order to get authors to be willing to put an ever broader range of content on our platform, we have talked through with them. We have been in a dialogue—with their representatives in most cases and them directly in some cases—saying, 'Okay, what kind of envelopes do you want? And what do you expect?' And sometimes they ask for things that just aren't realistic that would make things inconvenient for the user.

Gizmodo: What seems to me—what hurts my feelings—I feel like I, as a customer, want Microsoft to be totally on my side. In that, as far as the people that are producing things, that might want more DRM and might make it inconvenient, I don't understand what it necessarily benefits you to help them.

Gates: No, I've said it exactly. We have your interests totally in mind, but that includes having... if there's content that can only be there if it's rights protected, we want to be able to have that content available to you. And so all we're doing... in no sense are we hurting you, because if they're willing to make the content available openly, believe me, that's always the most wonderful thing. It's the simplest.

Take, like, putting soundtracks onto movies using our movie editor thing. If you have unprotected music you can take slideshows, put music to it, encapsulate it in the file, mail it around—it works perfectly. If you have rights management, it's actually painful because the people you're mailing it to don't have the certificate and it's kind of painful. But because the artists... some things are only licensed to be in that form, it's hard to put the track on Movie Maker. But hey, we want you, instead of not having that content, to have that content. And in the case that the authors decided it's rights managed, you can decide to stay away from it or to use it. That, again, is your choice.

We're the guys of empowerment. We want these things to be out there everywhere. But it wouldn't serve anyone's interests to go out there and say, 'Hey, by the way, there's no way to remind anyone at any time about any rights boundaries.'

Take medical records: is it your position that rights management for medical records is evil?

Gizmodo: 'Evil' is maybe strong. Do you mean in the sense that medical records shouldn't have any rights management at all?

Gates: Right. We remind people that, like if there's a medical record that has somebody's AIDS status in it, we have software—which is identical software—that says, 'Hey, if you're trying to forward to someone,' that, 'No, this is restricted. You can't forward this to someone. They don't have the right to see this.' It's the notion of 'should there be confidential information?'

Gizmodo: No, no, no. I think in calling that evil as opposed to whatever, I think that still basically comes down to, 'Do you feel like things should be able to have passwords on them or not?' And of course the answer is 'yes.' I do think that's reasonable. So I don't think anybody is trying to say 'DRM is evil.' I think what people are trying to say is that DRM, as sanctioned by the big players, may be holding back culture as a whole.

Gates: The DRM we put into these systems is used to protect medical records, and it's used to protect things people want to protect. And so it's hard for me to say, 'No, because it might be used for media for a way in some people don't like, I won't put it in there for medical records.' This is a platform that people can use in any way that they choose.

Gizmodo: I think that's a little close to, 'Think of the children.' I understand what you're saying, but just because, 'medical records, it's good to have a password on them' doesn't necessarily mean that when it comes to music or the things that I purchase that that's also a good thing. I think it all comes down to what it is you're actually paying for.

Gates: All we're doing is putting it in the platform. So I'm just saying, can you criticize us for having a platform that allows bits—bits, just bits; not music, not movies, not medical records, not tech things—to have any usage restriction for bits. Are we doing a disfavor to the world at large by saying some of our users, when they choose to—maybe for medical records—they can limit the accessibility of those bits?

Gizmodo: I think setting up the platform? No, it's not inherently bad. But I think it does depend on what it is that you're protecting. But I think we just disagree.